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New Zealand Dollar Slips Despite Non-Resident Appetite
DailyFX.com -
Talking Points:
The New Zealand Dollar has returned some of its Trump-inspired strength
This process continued despite news of steady offshore appetite for NZ bonds
Non-residents held 63.2% of the market in December
The New Zealand Dollar continued to retrace some of its Donald Trump-inspired gains on Wednesday, despite news of steady foreign appetite for its home nation’s assets.
Non-resident holdings of New Zealand bonds amounted to 63.2% of the market in December, official data showed. That was only slightly below November’s 63.6% level. The country offers investors a developed market with the relatively rare combination of high credit ratings and a stable outlook. Moreover, even at a record low of 1.75% for the Official Cash Rate benchmark, its interest rates are also relatively tempting at a time when other developed economies have cut their own to the bone.
Compare them with – say – Japan’s 0.0% or the UK’s 0.25% and you get the picture.
However, these arguments passed NZD/USD by a little. The Kiwi benefitted as did most other currencies from Donald Trump’s assertion in a Wall Street Journal interview that the US Dollar was too high.
NZD/USD climbed as high as 0.72194 on the back of these comments, but had been giving back some of those gains as Auckland’s Wednesday morning wore on. The process seems to be continuing despite the foreign bond numbers which in more usual times might have lent New Zealand’s currency a bit of support.
NZD/USD was down at 0.71985 in the immediate aftermath.
Ignoring the data. NZD/USD gives back some of its gains
Chart compiled using TradingView
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--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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